Major Workers’ Compensation Reform Looming in Kansas and Missouri

In response to a series of decisions from the Kansas Supreme Court, the Kansas legislature is currently working on major revisions to the Kansas Workers’ Compensation Act that will significantly shift the pendulum back into the favor of the employers and insurers. A series of Supreme Court decisions, which culminated in Bergstrom v. Spears Manufacturing, 214 P.3d 676, 289 Kan. 605 (2009) and Tyler v. Goodyear Tire & Rubber, 224 P.3d 1194, 43 Kan. App. 2d 386 (Ct.App. 2010), removed the requirement that an employee make a good-faith effort to find work after his work‑related injury and found that the wage loss suffered by an employee post-injury did not have to be directly correlated to his work-related injury. As a result of these decisions, cases which had been worth $10,000.00 to $15,000.00 were suddenly now worth $70,000.00 to $80,000.00. Prior to these decisions, if an employee did not make a good‑faith effort to return to the labor market after his injury, the Administrative Law Judge could impute a wage to them, which would usually have the effect of keeping the value of the award down.

In reaction to this situation, the Kansas legislature has taken on major reconstruction of the Kansas Workers’ Compensation Act in House Bill 2134. The Bill, which was originally passed by the Kansas House on February 17, 2011, was subsequently amended with some fairly significant changes by the Senate, which recently passed an emergency final action on March 21 by a vote of 39 to zero. However, the Senate amendments to the House Bill were not accepted by the House, and the Bill has been referred to Committee on March 29, 2011. It is likely a compromised version of the House Bill will be approved prior to the session ending in May of 2011. It is anticipated that these amendments, once passed by the House and Senate, will be approved by newly elected Governor Sam Brownback.

Major components of the Bill would change how work disability is calculated. It would require that an employee have a functional impairment greater than 7.5 percent to the body as a whole before being able to make a claim for work disability. Furthermore, the Bill would require that the opinion of the authorized treating physician be presumed to be determinative of the employee’s ability to engage in gainful employment, when temporary total disability is sought. The Bill would also reverse a prior decision of Casco v. Armour Swift-Eckrich, 154 P.3d 494, 283 Kan. 508 (Kan.Sup.Ct. 2007), which revised the method of calculating compensation for bilateral injuries involving upper and/or lower extremities.

Also, the caps on benefits were increased: Permanent total disabilities would be increased from $125,000.00 to $155,000.00; Temporary total disability would be increased from $100,000.00 to $130,000.00; Permanent partial disability would be increased from $100,000.00 to $130,000.00; and Death benefits would be increased from $250,000.00 to $300,000.00. The notice requirement, which currently requires the employee to give notice within ten days or 75 days upon a showing of just cause, would be amended to be strictly 30 days. The full text of HB2134 can be viewed at: http://www.kslegislature.org/li/b2011_12/year1/measures/hb2134/ .

Likewise, in Missouri, several efforts have been made, in order to address recent appellate decisions, which were found to be unsatisfactory. Also, the ongoing crisis with the Second Injury Fund that is administered by the Missouri Attorney General’s Office has been the subject of multiple proposed litigation in attempting to address the financial crisis that it is facing.

At the current time, there is proposed legislature addressing the situation with the Second Injury Fund, which would range from placing new limits upon how the Second Injury Fund is utilized in Missouri Workers’ Compensation matters to totally abolishing it. The primary role of the Second Injury Fund in Missouri Workers’ Compensation matters has been when the employee is found to be permanently totally disabled, but not just from the current work-related injury but from a combination of the current injury with preexisting disability. This has allowed the employer to avoid responsibility for a permanently totally disabled employee when the work-related injury only caused a part of that disability. However, due to the current economic environment, the amount of revenue available for the Second Injury Fund has been rapidly dwindling. It is anticipated that the Fund could be without funds within the next 12 months. Attempts to modify the involvement of the Second Injury Fund have been made over the last several years, without success. It is unclear as to whether any pending legislation will be successful in 2011.

Also, a recent Missouri appellate decision in Robinson v. Hooker, 323 S.W.3d 418 (Mo.Ct.App. W.D. 2010), held that an employee who is injured on the job could sue a co-employee for negligence and that person would not be protected by the exclusive remedy provision of the Missouri Workers’ Compensation Act. Senate Bill 8, which is currently in the House, after passing through the Senate, has utilized language similar to that in the Kansas Workers’ Compensation Act, which precludes an injured employee from suing any employee of that employer. This would reinstate the exclusive remedy provision of the Missouri Workers’ Compensation Act to co-employees. The full text of SB 8 can be viewed at:http://www.senate.mo.gov/11info/BTS_Web/Bill.aspx?SessionType=R&BillID=4065316 .

Updates will be provided once the 2011 legislative sessions have concluded for both Missouri and Kansas.